Powering On

Revenue & Customs is continuing its update and, at times, radical overhaul of its existing powers. A consultation documents was issued in late June with the less than exciting title of Modernising Powers, Deterrents and Safeguards: Payments, repayments and debt: the developing programme of work. Yet it has proved to be highly controversial due to its proposal that the Revenue could seek powers to seize the contents of individuals’ bank accounts and other assets. Of course, this is just one of many proposals and it is necessary to view the whole consultation to put this into context.

The purpose of the latest consultation is for the Revenue to align and streamline its tax payment and debt recovery procedures. Taxpayers will be offered more ways of paying, eg, instalment options, and improved help if they are unable to pay. However, those that simply will not pay are likely to face stronger enforcement action.
The proposals are being consulted on until September and then it will be decided what ideas will go forward. Some will require legislation that may appear in the Finance Bill 2008.
One idea in the consultation paper is a review of the setting off of debts and repayments with an automatic off-set mechanism being introduced across all the taxes, although this would not extend to tax credits or child benefit without the claimant’s agreement.
The powers to seize goods should be amalgamated to cover both direct and indirect tax debts for the same taxpayer. Similarly, the Revenue would be able to take a single civil court action for the whole of the debts owed by the taxpayer.
The Revenue is seeking views on the option of payment by credit card, with the fee passed on to the taxpayer. This is controversial in that although some use the flexibility of this mechanism regularly to manager debts, at quick glance at any consumer money programme highlight how easy it is for credit card use to yet more debt.
To enforce a debt, the Revenue has its own power to seize goods, but to get over other assets (eg, bank accounts or property) it must go through the courts. The proposal is that the Revenue’s powers should be extended so that it can attach a taxpayer’s assets directly without needing to apply to the courts. This is the proposal that hit the newspapers with some force in July but noticeably the Revenue is seeking views on weather this is an appropriate mechanism. Readers may recall that the Revenue did get severely criticised by the Public Accounts Committee for not bringing in its debts quicker, therefore it is being driven to consider a range of options.
The National Audit Office has recommended that the Revenue looks at the issuing a ‘tax clearance certificate’ to business which are fully compliant with their tax obligations. This might refer to tax return filing history, or payments history, or both. The Revenue seeks views on how this might work.
The Revenue would like the power to require third parties to provide contact details for debtors which it cannot trace, and also invites suggestions for other ways in which up-to-date contact details could be obtained.
The Revenue already uses the PAYE system to collect small underpayments, and would like to be able to do so even if the taxpayer does not request it. Enforcement action is costly and the Revenue would like the right to be awarded simple fixed costs if it obtains judgement against a debtor following a court action. At present the tax authority can only recover court fees, not costs.

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